Leading FMCG player Marico stated in its quarterly report that the brand has upped its advertising spends in Q2 FY21 (July, August, September 2020) to pre-Covid levels. This is a good sign for the industry that has been reeling under the declining ad expenditure from brands these past few months.
The report further stated that Parachute, a flagship brand from the company, reaffirmed its strong brand equity and clocked growth ahead of medium-term aspirations. Saffola edible oils continued its stellar run and delivered strong volume growth in line with past few quarters. Value added hair oils showed resilience and returned on a growth trajectory in the quarter from a sharp decline in Q1.
Foods portfolio, riding the tailwind and on the back of innovations, continued its momentum and registered exponential growth in line with the company’s near-term expectations. Discretionary portfolios of premium hair nourishment and male grooming performed better than Q1 but continued to face headwinds.
The company also launched new products in the health and hygiene segment that were tracking well across most channels. Marico has strengthened its position in the healthy foods and immunity-boosting segment with the launch of the Saffola ImmuniVeda range.
The international business has clocked mid-single digit constant currency growth. Bangladesh continued to lead from the front with double digit growth while other markets have shown improvement sequentially.
As per the company, rural continued to perform better than urban aided by government’s focused relief packages, relatively lower impact of the pandemic, the resilience of the agricultural sector in a declining GDP context and the consumption shift due to reverse migration of labour. Although there were intermittent supply chain disruptions across locations due to localized lockdowns, the distribution network has rebounded back to near pre-COVID levels. Traditional trade and e-commerce continued to drive growth. While modern trade fell behind, it did improve sequentially.
Although the key raw materials have seen an inflationary trend towards the end of the quarter, the brand expects to deliver healthy earnings growth on the back of robust volume growth and a host of cost-saving initiatives.
As lockdown restrictions are progressively easing, the company maintains a positive outlook for the rest of the year provided the ongoing health crisis does not escalate further and economic activity revives steadily. Given that the medium-term potential of the franchises remain firmly intact, we believe the company is on track to deliver sustained profitable volume-led growth, through a focus on strengthening the franchise in the core categories and driving the new engines of growth towards gaining critical mass.
